Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments March 14, 2020 erstellt
Beschreibung:
This paper explores potential inefficiencies due to incomplete contracts in a dynamic career concerns context. In a firm--worker relationship, the worker performs tasks that have tradeoffs between productivity and information about the worker's ability. We focus on task choices with no private costs, and assume symmetric information, in a departure from the existing literature. We show that the first-best outcome is obtained when the contract can specify both the wage and the task choice. This provides an explanation for wage jumps at promotions---a worker is assigned the more productive but less informative task after promotion. If the contract can specify only the wage, then inefficiency arises: The worker is biased toward choosing the less productive but more informative task, while the firm is biased toward choosing the more productive but less informative task